What is the minimum credit score I need to get a home loan in Australia?

To successfully apply for a home loan in Australia, one of the factors that lenders will consider in your application is your credit score. It is a number used by a number of lenders to assess your credit history when applying for a mortgage which provides them with a picture of your borrowing and repayment habits.

credit card affects credit score

What is a credit score?

A credit score is a number that provides an indication of how you are as a borrower when it comes to applying for loans and repaying them on time. The score will range from -200 to 1200 depending on which company is providing this score. In general, the higher the number, the better your score, which indicates to banks that you are a good candidate to lend money to.

Reservoir Finance can help you get your credit score. Contact us below and we’d be glad to assist!

How is a credit score calculated?

A credit score is calculated through “data aggregators”, namely through Equifax or Experian. They collect a number of information from banks, government and credit card providers in order to put together a picture of you as a borrower. Some information that they compile includes:

  • Loans or mortgages you have applied for
  • Credit cards you have applied for
  • Defaults or missed payments
  • On time payments with lenders or even utilities (such as mobile phone bills, electricity bills or water bills)
  • Bankruptcy history
  • Court judgments or actions against you in relation to finances or creditors
These factors are all considered and merged to form your credit score. Unfortunately it is a black box and there is not much information on the weighting of each of these factors.

What is a good credit score?

In general, a good credit score is any number above 600. However good is relative depending on the lender you apply as different lenders have different criteria for the type of credit scores they want their customers to have. A higher number will give you much more choice and flexibility in the number of lenders and banks who are willing to lend you money for your next home or investment property. But a real minimum credit score required by different lenders is a secret, which probably no one in the country can tell for certain.

The ranges that we have seen with lenders generally are:

  • Excellent Score – 700+
  • Good Score – 600-700
  • Average Score – 500-600
  • Below Average Score – 400-500
  • Bad – Below 400

A good credit score will also give you access to lower interest rates with certain lenders as they view this as “less risk”.

What is the minimum credit score for home loans in Australia?

The minimum credit score for home loans in Australia varies between the lenders. In general, with larger lenders, an excellent score is a must. However, not all lenders use credit scores in their applications. There are certain lenders that do not assess loan applications using credit scores at all! Instead, they assess the application on its own merits. So if you can show you have sustainable income with a good control of expenses, even if you have a bad credit score, some lenders would be open to lending money to you!

Reservoir Finance has a panel of over 40 lenders (most brokers do not even use 20) and we can help you identify the best lenders that suit your personal circumstances and credit score.

Can I get a home loan with a credit score of 500?

Yes you can! It depends on what property you are buying and which lender you are submitting your home loan application to as well as the amount you are seeking to borrow. This is something that mainly mortgage brokers can help you with as some banks may have limited loan products available that suit your needs. We can help you find lenders most suited to your personal circumstances and this is not something you should approach lenders directly as each application submitted will appear on your credit file and may affect your credit score.

Note that these lenders will tend to offer higher interest rates as a result of a higher “perceived risk” of lending to people with a credit score of 500.

How can I improve my credit score (quickly)?

Pay on time

The easiest way to improve your credit score quickly is to establish good habits and pay your bills, debts and credit card payments on time. Australia has recently changed its laws to cater for a policy of “positive (comprehensive) credit reporting” (CCR). This means that everytime you pay a bill, debt or credit card payment on time, it improves your credit score. It actually made it much easier for Australians to improve their credit score as it provides lenders with a fuller picture of your habits as a borrower.


In the past, Australia only had ‘negative credit reporting’ which meant that when you missed a payment, it would show up on your credit history (and affect your credit score). Today, when the banks pull your credit file, they will see all the on time payments as well, which makes the one or two missed payments you might have to be considered as a “once off” by many lenders.


Positive credit reporting was implemented in 2018. It means your credit file probably has at least 2 years of records where you have paid bills on time. Keep paying your bills on time and if you can show 12-24 months of solid habits, it will improve your credit score.

Clearing your debts

Another way to improve your credit history is to clear your debts. For example, if you had a phone bill that you paid late and the phone company put a mark (negative event) on your credit file, by paying off the debt, you can submit a request for them to clear the mark on your credit file. Removing these marks will help improve your overall credit file when a lender assesses you.

Stop blindly shopping around

Did you know applying for mortgages or credit cards will appear on your credit file? Or that applying for multiple credit cards when you really do not need them will impact your credit score?

Each time you visit a bank or lender’s website and hit the “apply now” button and submit an application, it will appear on your credit file! (The banks won’t tell you this, they want your application of course!). Whilst it is possible to borrow a reasonable amount on a lower income, you need to make sure it is strategic and that your application makes you look attractive to the lender!

It is advisable to shop smart and only apply for a loan or credit card with the bank or lender you have the best chance of succeeding and getting approval. Asking a mortgage broker to put together your application can also streamline this process.

If a bank is assessing your loan, having multiple records or loan applications within a short time frame does not look favourable for your application and will make it harder to receive approval.

Advanced Tips

There are more advanced tips and strategies that you can use to improve your credit score (such as consolidating your debts and submitting a loan application with strong budgeting disciplines). However these need to be tailored by individuals to the lender and it is something that Reservoir Finance can help you out with.

How do I find a loan best suited for my credit score?

Reservoir Finance is able to help you navigate the complexities of Australia’s financial system in order to help you achieve your personal lifestyle goals and dreams. We are an independent mortgage broker based in Sydney but service all of Australia! Our staff have worked in banks and the finance industry before joining Reservoir Finance. Our clients love how detailed we are in all that we do and explain things in simple terms.

We are able to provide you with a free no-obligation assessment of your current financial situation. In your calls with us, we can provide you with your credit score and a plan to improve it to get the loan best suited for your needs. Reach out to us today using the form below or call us on (02) 9261 8994. We would be more than happy to assist!


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